Walker & Dunlop Inc’s (WD) EPS Grew 50.3% In A Year. Was It Better Than Long-Term Trend?
Examining how Walker & Dunlop Inc (NYSE:WD) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Walker & Dunlop is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its thrifts and mortgage finance industry peers. See our latest analysis for WD
How WD fared against its long-term earnings performance and its industry
To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method enables me to analyze different stocks in a uniform manner using the latest information. For Walker & Dunlop, the latest twelve-month earnings is $149.0M, which, in comparison to last year’s level, has risen by a non-trivial 52.75%. Since these figures may be fairly short-term thinking, I have created an annualized five-year value for WD’s net income, which stands at $58.3M. This means that, generally, Walker & Dunlop has been able to steadily grow its earnings over the past few years as well.
What’s the driver of this growth? Let’s see if it is only owing to industry tailwinds, or if Walker & Dunlop has seen some company-specific growth. In the past couple of years, Walker & Dunlop grew its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Looking at growth from a sector-level, the US thrifts and mortgage finance industry has been growing its average earnings by double-digit 11.00% over the prior year, and 13.84% over the previous few years. This suggests that any uplift the industry is benefiting from, Walker & Dunlop is able to amplify this to its advantage.
What does this mean?
Walker & Dunlop’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Walker & Dunlop gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Walker & Dunlop to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for WD’s future growth? Take a look at our free research report of analyst consensus for WD’s outlook.
2. Financial Health: Is WD’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
